Asian Gas Demand Spawns Floating Superfactories
Extract from an article by Eric Yep published on 2 April 2014 by The Wall Street Journal
The concept of a floating gas factory is so far untested. Alain Poincheval, project director for Prelude at Technip said… the vessel is being designed for the harshest environmental conditions at sea including Class 5 cyclones. Prelude, which is being built by Samsung Heavy Industries, is expected to finish construction by the first half of 2016 and industry estimates put the project cost at roughly $11 billion-$12 billion. Despite the unproven technology, a number of other FLNG projects are already under development.
Shell Prelude: Tales of the Unexpected – When the party ended with a bang!
Tales of the Unexpected – When the party ended with a bang!: 3rd in a series of articles by Bill Campbell (right), retired HSE Group Auditor, Shell International, about safety issues relating to the Shell Prelude FLNG project
Thus methane-air explosions are unpredictable, and by definition unpredictable events take you by surprise and can occur when you least expect them, and often when you are least prepared. And unfortunately, from time to time, these unpredictable events can have catastrophic consequences as history tells us.
By Bill Campbell
LNG is natural gas (methane) refrigerated, the chilling process eventually turning the gas into a liquid shrinking its volume by 600 times. As we are aware from elementary physics, energy cannot be created or destroyed, so the whole economic model of the use and transportation of LNG worldwide, which really started in the 50′s and is due to exponentially expand in the next decade, is that the heat energy contained in one metre cubed of the liquid equates to six hundred metres cubed of methane. So the physical characteristics of liquified natural gas is what makes it economically viable in its transportation over in some cases many thousands of miles from its source to where it will be used when converted again into its natural state. But it’s this conversion that can make it so dangerous should it spill or leak into the atmosphere accidentally.
In the US, the use and transportation of LNG was curtailed and did not take off again till the early 70′s. It was during the war, and this may have been a factor, but in 1944 an LNG tank ruptured in Cleveland (inadequate nickel content in the stainless steel tank). The resulting explosion and fire affected 47 surrounding acres, the black and white photographs are reminiscent of pictures of post bomb Hiroshima. The resulting fire and explosion killed 128 people.
Fortunately, spills of LNG in volumes that can have catastrophic consequence are rare but in recent years are increasing in frequency. Human error as ever, seems a key causal factor. In 2004 at Skikda, Algeria, an explosion and fire caused 27 deaths, 74 injuries and material damage well outside the plant boundary. In the same year a pipe carrying LNG was accidentally damaged in Belgium, 23 known fatalities and in 2005 in Nigeria an LNG underground pipe exploded and the resulting fire engulfed an estimated 27square kilometres.
So what?
Well the good news is that many other LNG spills occurred with no serious consequence, it would appear that it is the physics of LNG and how it vaporises back into its gaseous state that saves the day. When spilled, being heavier than air it sinks until it contacts the ground or the sea. The dispersion of the vapour cloud then depends on many variables, mainly volume spilled, wind speed and direction, contact with water or seawater etc. If large volumes are spilled, the expansion ratio can lead to vapour clouds measured in cubic kilometres rather than cubic metres but much of the bubble is either lean, below the flammability limits, or rich, above the flammability limits of methane. God, or whichever God you believe in, wisely made methane a gas with a restricted flammability range, from circa 5 to 15 per cent by volume in air. Nevertheless it is still the major industrial killer, and causes significant deaths domestically as well.
Concerned about the potential consequences of LNG spillage, accidental or due to terrorist activities,much research was carried out worldwide. Shell also involved itself in trials with LNG spillage at sea, videos were taken but restricted in distribution. The bottom line was that LNG spills were difficult, or nigh impossible to ignite. Within the large and expanding vapour cloud you need to have a subset bubble within the flammable range to come into contact with a source of ignition.
Getting back to our vested interest in a Prelude, and offshore installations in general.
There are many hundreds of significant gas releases with no consequential damage. From UK North Sea official statistics over the two year period 2008/9 for example, there were 155 gas leaks of significance or one every 5 days or so. This data covers some 200 installations. So the probability of gas leaks on offshore installations is ever present, and historic data means that in the formulation of an offshore installation risk matrix for Prelude FLNG say, such a leak, whether they be raw gas, gas condensate, LPG, or LNG must be considered as a likely if infrequent event. The 155 North Sea leaks used in the example above, defined in The UK legislation as dangerous occurrences because of the potential of these events, turned out to be of little consequence as no ignition of the flammable atmosphere occurred or if it did ignite there was insufficient fuel to cause a damaging explosion
So in summary, explosions of methane air mixtures appear to be randomly distributed, that is the probability of an explosion today, is the same as it was yesterday, and the same as it will be tomorrow. If this gives you false hope it should not. The fatal explosion on Cormorant Alpha in 1982 was the first time gas had entered a non hazardous area on this facility, the explosion on the same facility in 1989 was the first time gas in any quantity had been released in a concrete column, in 1988 the explosion on Piper A was preceded by a significant gas release a year or so earlier which did not ignite, the explosion on Deepwater Horizon appears to have occurred after only two previous occasions when drill kicks caused significant volumes of gas in the atmosphere, and the minor ignition of gas within the accommodation on Fulmar was the first known time that gas had entered such a building.
Thus methane-air explosions are unpredictable, and by definition unpredictable events take you by surprise and can occur when you least expect them, and often when you are least prepared. And unfortunately, from time to time, these unpredictable events can have catastrophic consequences as history tells us.
This can be best demonstrated in the short but true tale below.
The party was a dull affair until unexpectedly things went off with a bang
This is a true story, a story of how unpredictable but constantly dangerous LNG spillages can be. At a safe and well designed test facility located for from the madding crowd, at Mercury in the Nevada Desert, in 1987, the US Dept of Energy huffed and puffed, day after day, doing large scale tests to get LNG spills to ignite. Frustrated, no doubt with their lack of success the boffins were ready to pack bags to go home when a vapour cloud accidentally ignited and damaged and propelled polyurethane pipe and insulation outside the test site boundary fence. It is not known or reported that anyone was injured, so hopefully the only cost was an increased laundry bill.
Bill Campbell
Related articles
Asian Gas Demand Spawns Floating Superfactories: 2 April 2014
Tales of the Unexpected and Royal Dutch Shell Prelude FLNG: 28 March 2014 (Second Prelude article by Bill Campbell)
Pipelines and welding risks for Shell: Kashagan and Prelude(Article by an oil industry expert) 17 March 2014
What should frighten stiff Royal Dutch Shell shareholders (Article by John Donovan) 15 March 2014
Royal Dutch Shell Prelude Safety Debate: 12 Feb 2014
Shell Plans Boat to Tap Gas Fields: 29 Jan 2014
Will Shell’s Prelude FLNG project be another white elephant?(Article by an oil industry expert) 8 Feb 2014
Shell Bets on a Colossal Floating Liquefied Natural Gas Factory Off Australia (New York Times Article) 12 November 2012
Shell Prelude FLNG: loss of containment of hydrocarbons almost inevitable: 21 Feb 2014 (first Prelude article by Bill Campbell)
Royal Dutch Shell Prelude to disaster? (Article by John Donovan) 10 Jan 2014
Shell ‘ignored accident warning’: BBC News 14 June 2006
FT: Shell receives 100-plus serious bids for its Nigerian onshore stake
Article published on 2 April 2014 by Seeking Alpha
Royal Dutch Shell’s (RDS.A, RDS.B) plan to sell much of its onshore Nigerian production has been met with skepticism – with oil stealing rife in the Niger delta, who would buy? – but FTreports Shell has received more than 100 serious bids for its 30% stake in five blocks valued at $3B-$5B. A clean exit from the delta woes would be an early win for new CEO Ben van Beurden, whose ascent was aided by the massive oil theft that contributed to January’s profit warning.
Shell: banishing delta blues
Extract from an article by Jonathan Guthrie published 2 April 2014 by the Financial Times
Extracting Shell neatly from the delta acreages would be an early win for new chief executive Ben van Beurden. Oil theft contributed to the profit warning in January that marked his accession. Longstanding animosity to Shell feeds the problem. Government violence against Nigerians hostile to oil majors culminated in the execution of playwright Ken Saro-Wiwa in 1995.
Shell Appoints New Executive VP of Global Fuel Retail
Extract from an article published 2 April 2014 by publics.bg
Shell announced that Istvan Kapitany will assume the position of Executive Vice President of Global Fuel Retail. Mr Kapitany will thus manage the largest one brand global fuel retail network comprising over 43,000 commercial units in more than 70 countries. Shell gas stations employ around 500,000 people around the world and service more than 10 million customers per day.
Shell’s LNG fuel retreat
Extract from an article published by LNG Industry on 2 April 2014 under the headline: Lessons from Shell’s LNG fuel retreat
On 26th March, just after Shell cancelled the 300 000 tpa Jumping Pound, Alberta, project, the company announced it would also abandon its two remaining 250 000 gall. /d LNG projects in Louisiana, and Ontario.
Norway Warns Oil Companies Against ‘Unacceptable’ Project Delays
Extract from an article by
Norway, westernEurope’s biggest oil and gas producer, warned companies that “unacceptable” delays to offshore projects risk damaging the goodwill they currently enjoy from the government. Oil companies fromStatoil ASA (STL) to Royal Dutch Shell Plc (RDSA) are cutting investment plans as they grapple with rising costs and falling returns amid stagnating energy prices.
Shell’s Mr Fixit hammers home a message of capital discipline
Extract from a highly informative article by Guy Chazan published on 1 April 2014 by The Financial Times
Late last year, for example, Shell decidednot to proceed with a multibillion-dollar plant on the US Gulf Coast that would have converted gas into synthetic diesel. Unusually, it canned the project before it had even carried out the basic design work. Mr van Beurden says that is the shape of things to come.
Shell turns to Asian suppliers in US shale race
Ben van Beurden, Chief Executive Officer. Royal Dutch Shell Plc
Extract from an article by Guy Chazan and James Wilson published by The Financial Times on 1 April 2014
Royal Dutch Shell has said it will deploy more Chinese equipment at its struggling US shale business – becoming the latest natural resources company to try to reduce costs by switching to cheaper Asian suppliers. Mr van Beurden, who took the reins at Shell in January, said one of his biggest challenges was to turn around the company’s North American shale business.
Shell turning to Asian suppliers
Extract from an articled published on 1 April 2014 by Seeking Alpha under the headline: Shell turning to Asian suppliers, underscoring threat to Caterpillar, Joy Global
Royal Dutch Shell (RDS.A, RDS.B) says it will use more Chinese equipment at its struggling U.S. shale business, becoming the latest natural resources company to try to reduce costs by switching to cheaper Asian suppliers. Shell’s shift to lower-cost Chinese manufacturers underscores the potential threat to western industrial equipment makers such as Caterpillar (CAT) and Joy Global (JOY) from their competitors in emerging markets.
Peter Rees refuses to comment on circumstances of exit from Shell
Peter Rees QC
Extract from an article by Coming out of his Shell: Peter Rees on leaving “the best job in law”
General counsel at Shell – “the best job in law” according to Peter Rees QC. So what prompted the silk to stand down two years ahead of schedule in November 2013? Rees refuses to comment on the exact process leading to his departure…
Kashagan aka Cash All Gone
Extracts from an article by on Mar 31st 2014 under the headline: ExxonMobil Is Spending Plenty but Growth Is Just Around the Corner
The Kashagan field is the largest oil discovery in 40 years, and the project to develop the field has required so much investment and expertise that a consortium of oil majors has been required to develop it. The consortium includes Exxon, Royal Dutch Shell , Italy’s Eni , and France’s Total. Kashagan is not just one of the world’s largest oil fields, but it has also turned into one of the most complex and expensive oil projects ever. From an initial cost estimate of $57 billion for the life of the project, its development is now expected to cost a staggering $136 billion over its lifetime — that’s 138% more than originally planned. Exxon and Shell each have just under a 17% stake in the project, amounting to almost $650 billion in revenues each over the life of the project.
Shell Oil sued for allegedly firing woman on maternity leave
Extract from an article by published 31 March 2014 by The Southeast Texas Legal Journal
Nicole L. Ryder filed a lawsuit March 21 in the U.S. Court for the Southern District of Texas (Houston Division) against Shell Oil Co. and Shell Exploration & Production Co., citing violation of the Family and Medical Leave Act. According to the complaint, Ryder began employment with Shell in June 2008. In August 2011, Ryder entered a Restricted Cash Agreement to Serve with Shell.
U.S. Court for the Southern District of Texas (Houston Division) Case No. 14-CV-00726
How a Giant Kazakh Oil Project Went Awry
Extracts from a highly informative Wall Street Journal article bySelina Williams,Géraldine Amiel andJustin Scheck published 30 March 2014
…the project has been plagued by budget blowouts, engineering missteps and management disputes extending from offshore roughnecks to top government and corporate leaders. Miles of leaky pipeline make up what is arguably the world’s most expensive plumbing problem. The project is years late, more than $30 billion over budget and now halted indefinitely.
“Nobody’s happy with the governance, and I don’t think anybody’s happy with the operatorship,” Shell Chief Financial Officer Simon Henry said.
The TRUTH will set you FREE.
